A Day in the Life of a Financial Advisor

There are a lot of statistics out there about financial advisors and their schedules. For example, research from Michael Kitces found that advisors spend 20% of their time on overhead and 36% of their time preparing for client meetings. 

Of course, the numbers aren’t everything. 

Many aspects go into how an advisor spends their time, such as:

• Whether they are a broker or fiduciaries 
• If they outsource tasks or have a staff
• Advisor preferences

In today’s article, I’ll cover how brokers and fiduciaries spend their time differently and how I spend my time as a fiduciary. 

First: Financial Advisor vs. Registered Investment Advisor

Before we dig into how financial advisors spend time, I want to define better “financial advisor.” In casual conversation, it’s often used to describe both financial brokers and registered investment advisors (RIA).

The difference between these two roles results in completely different workdays. Here’s why.

A broker, often labeled a financial advisor, is essentially a salesman. They have no legal obligation to advise in your best interest since they earn via commission. Therefore, financial advisors typically spend their day prospecting or selling products. They spend much time playing golf or networking at the Chambers of Commerce.

An RIA, such as myself, is not a salesman but a fiduciary. First, an RIA must legally work in a client’s best interest. Second, an RIA doesn’t earn a commission. These advisors earn money from client fees, usually 1% of all assets under management. 

As a result, RIAs spend much less time prospecting and selling than brokers—instead, we emphasize research. An RIA must ensure that a client’s portfolio is optimized to grow their salary. The better your portfolio performances, the more we both earn.

There is, however, a problem with private equity buyouts of RIA firms—something we cover in a separate article on PE and advisory firms. 

How I Spend My Time as an RIA

So, what does an RIA’s day look like?

There are a few different tasks I juggle as an independent RIA:

• Client meetings: Building client relationships is one of the most important parts of being a financial advisor. It’s impossible to build a functional portfolio that offers peace of mind without knowing the person. I am very proud to say that many of my clients have become my friends over the years—and this is due to focusing on getting to know them.
  
  But it’s not just meet-and-green conversations. It’s doubly important to check-in with clients during market instability, and to thoroughly explain my recommendations.
  
  
• Research: The next biggest use of time is research. Not all financial products are simple to understand or analyze. And as the market shifts, it’s essential to review and rebalance portfolios when necessary.
  
  In addition, as an RIA, I have access to higher-quality institutional investments, often with low expense ratios and sharper upsides. However, not every product is right for every portfolio and financial plan. Some assets that seem fantastic may have hidden vulnerabilities in the current market or include unwanted tax consequences.
  
  For these reasons, research takes at least 50% of my time.
  
  
• Financial and Estate Planning: As an advisor, I do more for my clients than invest their money. Time also has to be spent on long-term strategy, whether planning for life milestones like retirement or setting up a trust.
  
  
• Continuing Education: I must invest in regular learning to maintain my status as an independent RIA. Continuing education enables me to stay up-to-date with current market trends and ensure I’m applying best practices to investing.
  
  
• Administrative tasks: Finally, I spend a little bit of time every day on things like responding to emails, setting up meetings, billing, keeping my website updated, and other essential tasks.

As with many established practices, I try to minimize administrative tasks and marketing efforts by employing a team of professionals. Doing so allows me to spend more time where it matters—with my clients and researching potential investments. 

More On the Financial Advisor Mindset

You don’t necessarily need to be an RIA or financial broker to better manage your finances. Much of what makes my practice successful is my ability to take my time. It’s a shift in mindset—I don’t focus on potential gains but on mitigating potential losses.

I also try to share that information regularly with my clients and email subscribers.

To learn more, sign up for my monthly newsletter, Beyond the Numbers. 

‍